Mid-Market Companies Have a Distinct Edge in Disruptive Innovation

By John P. David,
business.com writer
Nov 15, 2018
Image Credit: TypoArt BS/Shutterstock

These three areas offer ripe potential for small and mid-size companies.

Middle-market, entrepreneurial companies are poised for dramatic growth and market opportunities in coming years if they can embrace disruptive innovation, according to former Silicon Valley engineer and now Florida-based venture capitalist and private equity investor Mike Wetzer.

At the recent International M&A Partners (IMAP) Fall conference in Miami, Wetzer told an audience of middle-market merger and acquisition specialists from around the globe how the innovative companies that they frequently represent are sought after by the largest companies in the world. Wetzer emphasized that streamlined, smaller companies can innovate quickly while big companies can't innovate fast enough.

Those companies that focus on disruption stand to make it big. Wetzer recounted organizations he is currently and was previously involved with as prime examples. While a consultant at Accenture, Wetzer worked with a team at Raytheon that turned aircraft design and construction on its head. Private jets were traditionally designed and built in sequential development phases, but this team instead chose to bring designers and builders together under one roof, leverage advanced 3D all-digital design and utilize state-of-the-art composites. The result was a lightweight aircraft constructed in two carbon composite fuselage sections which were connected to the wing with just a few bolts in a fraction of the time and cost. The project was completed in 38 months, shedding years off the typical design and construction process.

Another disruptor is a new entry to the on-demand economy, Dallas-based Pickup. The app-based service helps consumers and retailers deliver heavy or bulky items around town, like those occasions when you might borrow a friend's pickup truck. Pickup executives originally thought its customers would solely be individuals but have since worked with retailers like Pier One, Williams Sonoma and Crate & Barrel. It has now expanded to 39 cities and is changing how larger goods are delivered from retailers to consumers' homes.

By hiring what it calls "good guys with trucks" to do the moving, Pickup actually owns no trucks, following the lead of other disruptive companies, like Uber. Pickup doesn't own vehicles, Facebook doesn't own content, Airbnb does not own real estate, and Alibaba does not own any inventory.

For small and mid-sized business, Wetzer sees remarkable opportunity for innovation and disruption. He points to a 2015 Vanson Bourne survey done for EMC which shows that many organizations fail to innovate in an agile way, predicatively spot new opportunities, deliver a personalized experience, operate in real time or demonstrate transparency and trust. These shortfalls open the door for companies to take advantage of current trends.

Entrepreneurs should explore three main areas for opportunities to disrupt:

  • Technology, including 5G, artificial intelligence, blockchain, autonomous vehicles, the internet of things and others
  • The shrinking planet and opportunities surrounding globalization and the competition for resources
  • Society, including social media, privacy, crowdsourcing, the millennial powershift and others

According to the Center for Creative Leadership, the following activities can harm innovation: 

  • Discouraging creativity
  • Not evaluating fully
  • Pushing a top-down agenda
  • Forcing structure
  • Confining innovation to R&D
  • Criticizing first
  • Derisking/scaling back
  • Rejecting ambiguity
  • Acting like a know-it-all

One of the main takeaways of the IMAP conference is that innovation is not necessarily a clean business. Disruption is, in fact, says Wetzer, raucous, and even the current processes for innovation used by companies are open for disruption.  

It's clear that disruptive innovation is a major differentiator for startups and middle-market companies, as large-cap companies struggle with innovative growth. Small and mid-sized companies are nimble enough to innovate in a meaningful way, Wetzer says, while large-cap companies can't innovate fast enough – though they are willing to pay handsomely for it.

John P. David is president of David PR Group (DavidPR.com) and a partner with online reputation management company WebFactCheck.com. He specializes in strategic communications programs and represents both businesses and individuals with online issues. His book "How to Protect (Or Destroy) Your Reputation Online" was published in October of 2016.
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